NEW YORK (TheStreet) -- Transocean (RIG) - Get Transocean Ltd (Switzerland) Report shares are up 4.76% to $19.13 on Friday after the international offshore contract drilling services provider released its fleet status update after the closing bell yesterday. Also influencing the stock today is rising oil prices.
The company reported today that the total value of new contracts since its last fleet status update a month ago is approximately $453 million including contracts awarded to two rigs that had previously been idle.
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Analysts at Cowen do not see the fleet report as being positive and lowered the company's price target as a result, saying, "We believe that Transocean's December Fleet Status Report has negative implications for the stock. While the company secured one attractive contract this month it is not enough to fill much needed UDW floater availability. We maintain our Market Perform rating on the stock and lower our price target to $17 from $20."
Despite the disappointed analyst outlook, the stock is being helped by rising oil prices as WTI Crude and Brent Crude are up 1.93% and 1.33% respectively in trading today.
Separately, TheStreet Ratings team rates TRANSOCEAN LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRANSOCEAN LTD (RIG) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 506.0% when compared to the same quarter one year ago, falling from $546.00 million to -$2,217.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 64.95%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 513.51% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- RIG, with its decline in revenue, underperformed when compared the industry average of 15.9%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- RIG's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.42 is sturdy.
- You can view the full analysis from the report here: RIG Ratings Report